Taiwan stocks fall

Taiwan shares dropped 5.02 percent at a fresh five-year low on Monday, as they played catch-up with more drastic losses seen in other global markets, after the Taiwan government ended a rule that halved the daily downside limit. The main TAIEX share index had fallen 231.02 points lower at 4,348.60 about one hour into trade, paring earlier losses of up to 6 percent at the opening bell.
"Today's fall is just reflecting the true value of the market right now, especially after the restrictions on the down limit that were in place last week," said Kevin Yang, president of Paradigm Asset Management." The government, which had come under fierce criticism, announced the local market would resume the 7-percent down limit to boost market liquidity. But some analysts said the government was pumping money into the market to support the current low prices.
"Certainly, besides the government, there're also some funds looking to shore up their holding. We're looking at some very low valuations for TSMC now and some investors may choose to go in now," said Rick Hsu at Nomura Securities. The island's National Development Fund could raise its limit on buying Taiwan's stocks twenty-fold to T$200 billion, the Economic Daily reported on Monday.
Most of the TAIEX's main sub-indexes that measure performance by industry were in the red, with many of the island's blue chips joining in the freefall. Tech heavyweight TSMC slid 3.14 percent. The contract chip maker is set to release its third-quarter result on Thursday. Hon Hai, Taiwan's top electronic parts maker, fell by its daily maximum limit for a sixth session in a row ahead of its third-quarter results announcement, which it must release by the end of the week.
Fears of slowing consumer demand for products sold by Hon Hai's clients heading into the critical holiday shopping season also drove investors away from the company. Smartphone maker HTC Corp, the day's most active stock by turnover, was also limit-down on similar fears. The morning's sole bright spot was China Airlines, jumping 6 percent in early trade due to lower oil prices and attractive valuations, analysts said.